Chapter 5: Federal and State Regulators and Enforcement of Privacy Law
Unfair Trade Practices
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An unfair practice causes or is likely to cause substantial injury that is not reasonably avoidable by consumers and not outweighed by countervailing benefits. Unfairness needs no deceptive statement - see Equifax and the criminal-prosecution-first Uber case.
The three-part unfairness test
A unfair practice (1) causes or is likely to cause substantial injury (not merely speculative); (2) not reasonably avoidable by consumers; and (3) not outweighed by countervailing benefits to consumers or competition. No deceptive statement is required - inadequate security or disclosures can be unfair on their own.
| Case | Year | Key point |
|---|---|---|
| In the Matter of Equifax | 2019 | 2017 breach hit ~150M consumers; settlement with FTC, CFPB, and 50 states/territories; $300M consumer fund, $175M to states, $100M civil penalty to CFPB; 20-year comprehensive security program |
| In the Matter of Uber | 2018 | Two breaches (2014, 2016); concealed the 2016 breach and paid a ransom; first time a company executive faced criminal prosecution over a breach - the security chief was convicted in 2022 of obstructing an FTC investigation and concealing a felony |
Key terms - quick answers
What is “Unfair practice”?
A practice that causes or is likely to cause substantial, non-speculative consumer injury that is not reasonably avoidable and not outweighed by countervailing benefits to consumers or competition.
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